The Hottest Entrepreneurs in America

The trouble with the ever-swelling applause directed toward entrepreneurship -- whether reflected in overseas economic initiatives, election-year encomiums, or awards programs like this one -- is that it can make you overlook the actual entrepreneurs. It can make you forget, if you let it, that company building happens only one company at a time, and that every time is different -- and that while every attempt to grow a business is worth admiring, some attempts are worth admiring more. The trouble is that when speech makers call all company builders heroic and astonishing, it can make you forget that some actually are.

You'll meet nine such people in the pages that follow -- which constitute our coverage of this year's Entrepreneur of the Year Awards, sponsored by Ernst & Young, Merrill Lynch, and Inc. Six are winners in special categories, from Turnaround Entrepreneur of the Year (Joanna Lau) to Supporter of Entrepreneurship (Alvin Rohrs). The remaining three -- Allen Breed of Breed Technologies, Jim Koch of Boston Beer, and Jirka Rysavy of Corporate Express -- are the finalists for the top award, overall Entrepreneur of the Year. Breed, the man more responsible than anyone for putting air bags into automobiles, is the winner.

Why? Because over the course of two decades he fought to establish a product that his only potential customers -- the big automakers in Detroit -- fought just as hard to sabotage. (And he won.) Because when air bags finally were accepted, he had to outdesign, outproduce, and outsell multibillion-dollar competitors. (And he did.) Because he invented an industry. Because he earned a 25% net profit. Because the judges said so. (Though it was not a unanimous vote.)

The seven judges, each a highly regarded company builder, venture financier, or academic leader in his or her own right (see "The Judges," below), would tell you that their decision wasn't easy. By the time the finalists in all the categories reached them, the candidates had survived a winnowing from a national field of more than 3,600 rigorously selected nominees. About 400 of those 3,600 won awards -- and consideration as national semifinalists -- in 44 local markets around the country. Those 400 were cut to 17. And those 17 were cut to the few profiled here.

This year we've chosen, untraditionally, to pay special attention to the three overall finalists. There are two reasons. One, it would be almost impossible to find three enterprises less alike -- from the market challenges they faced, to their strategies, to their founders' backgrounds. Two, that very dissimilarity, set against the uncanny similarity in the magnitude of their respective achievements, amounts to an object lesson in just how varied the paths to entrepreneurial success are.

How different are these men? Breed is an industrialist, a vertical integrator, in a just-minted market with a handful of customers. Rysavy entered an old, fragmented business-to-business market and consolidated it through acquisition, leveraging state-of-the-art technology every step of the way. Koch competes with giant companies in one of the world's most ancient industries, sells to millions of consumers, and operates a manufacturing operation as virtual as Breed's is vertical.

Breed is 68, Koch 45, and Rysavy 41. Breed is an inventor who taught himself how to manage; Koch has three Harvard degrees; Rysavy is a Czech immigrant who 10 years ago didn't even understand capitalism.

Koch could wear his gray chalk-striped suit in any corporate boardroom in America. You'll find Rysavy with whiskers, wearing track shoes and living in a Rocky Mountain cabin with no running water. And Breed's at home in a lab -- or at a factory or in a customer's hallway or a legislator's lobby, making a pitch -- at home anywhere, really, because by now there's nowhere he hasn't already been.

In the end what's hardest to fathom, and as a result most remarkable, is why these three founders figured out -- and acted on -- what no one else in their industries could. Why didn't others among Breed's countless timing-device-engineer colleagues understand the business that air bags would bring? Why couldn't anyone else with a beer recipe and a business head capitalize on the market opportunity Koch seized? Why did it take Rysavy, who hardly spoke English for goodness' sake, to see what thousands of independent office-products suppliers had stared at blankly since the second World War?

Side by side (by side), their histories beg the question, Why them? And demonstrate that even the most notable company building follows no formula and requires only ingenuity, boldness, and steel.

The moral, then, is both clear and heartening: There are -- the examples of these three creators appear to proclaim -- no limits to the kinds of routes that lead to success. There is -- they seem to be telling us -- no one true way. So make your own. As they did.

In this issue are their stories. -- The Editors

THE JUDGES

Teresa Amabile

Harvard Business School professor and author

On Turnaround Entrepreneur Joanna Lau of Lau Technologies:

"Her story isn't as big as Turnaround runners-up Microchip's or Celestial Seasonings', but in many ways I think it's more impressive. Defense contracting is a pitiful -- and male-dominated -- industry. And here comes a young woman willing to remortgage her house and cash in her pension to have a shot in it.

"Her strategy has been clear and purposeful: get back those lost customers who were just sort of neglected, maintain extremely high quality and service, find a new, more healthy niche in the defense industry, and use that same kind of marketing savvy to identify a new nondefense line of work -- which is drivers' licenses and digitized ID cards. She's brought this company from the dust to something strong. That's extremely impressive."

Patty Dedominic

Founder and CEO, PDQ Personnel Services

On Overall Entrepreneur of the Year Runner-up Jirka Rysavy of Corporate Express:

"I think the most striking thing is that in 1991 he did $77 million and in 1995 he's doing $1 billion -- and profitably. And I agree with Teresa Amabile that the Horatio Alger aspect is important here. The fact that Rysavy has been in this country only 11 years says something special about both the man and the country.

"I've watched some people in the office-supply business suffer, so I'm impressed by what he's done in that climate. His strategy is smart -- use technology to maintain low cost and deliver service. And now he's recruited a president who is a former CEO of a $5-billion company, so he's laying the managerial infrastructure for a much bigger business still."

Chris Sullivan

CEO, Outback Steakhouse, and 1994 Entrepreneur of the Year

On Emerging Entrepreneur Paul Verrochi of American Medical Response:

"This acquire-and-consolidate trick is hard. When you assemble, you've got varied cultures to deal with and varied management of the businesses you buy. Verrochi impresses me -- he identifies management teams carefully, looks for companies with 20 years of management experience. He has a very solid idea of what he's looking for and has been able to sort through a lot of acquisition opportunities and apparently pick the right ones. Ambulance service is a very fragmented industry around the country, and if his due diligence process wasn't good and he wasn't buying the best-managed companies in each market, he wouldn't be having this kind of success."

Bill Sahlman

Harvard Business School professor, author, and chairman of Harvard Business School Publishing Corp.

On Entrepreneur of the Year Overall Runner-up Jim Koch of Boston Beer:

"All he did was enter a business in which Miller and Anheuser-Busch collectively own 66% of the market -- and those folks make Bill Gates and Pepsi look like they're not very competitive. That's a huge degree of difficulty. By identifying the right niche and using guerrilla marketing tactics, and without raising outside money for a long time, he took on the challenge and succeeded.

"In sum, he attempted something that's very, very hard, and he's built a company that's a thorn in the side of the big boys. Now they're coming at him hard; it'll be interesting to see what happens."

Jerry Ehrlich

CEO, Wabash National Corp., and 1992 Entrepreneur of the Year

On Overall Entrepreneur of the Year Runner-up Jirka Rysavy and Overall Winner Allen Breed:

"As a judge, you couldn't make a mistake picking between them -- they're both phenomenal stories. I was impressed by how Rysavy really did start from zero, built two companies, and rolled them into this one.

"However, Corporate Express has been assembled from existing businesses -- acquisitions -- whereas Breed is just pure gut growth, and to me there's a distinction to be made. To grow by acquisition and recognize synergies and be able to knit a company together requires quite a talent. But to literally invent a market -- which Breed did -- is even more unusual. I'll take Breed."

Jim McCann

President, 1-800-Flowers

On Supporter of Entrepreneurship Alvin Rohrs's Students in Free Enterprise (SIFE):

"It works on the principle that Covey talks about -- that the best way to learn something is to have to teach it. A lot of the presentations that come out of the program turn into business plans and real businesses.

"So, practically, it's about economic literacy. But the program's great contribution might be cultural: it turns the entrepreneurial world into an option for kids to know and consider, gives it social standing, and makes it acceptable. While most of what goes on in education is geared toward going to work for somebody, SIFE helps them see that there might be another way."

Kevin Landry

CEO, TA Associates (venture-capital firm)

On Entrepreneur of the Year Allen Breed:

"Incredible record. Lots of employees. Great story. I wish I had invested.

"Breed's got to be a man of phenomenal patience and perseverance, given what it takes to deal with Detroit -- which hates outsiders under the best of circumstances and obviously didn't want to deal with him. I suspect that getting air bags accepted and sold was not an easy thing to accomplish, and he went through some tough times before he got there -- times when he couldn't hold a credit card and couldn't make a purchase without notifying the banks in advance. The record now -- he's doing better than 20% pretax -- is nothing short of incredible."

How the Entrepreneur of the Year Judges Were Selected

This panel of leading national business thinkers included CEOs (from service, manufacturing, and retail sectors), educators, and a financier. The selections were made by editorial manager Margherita Altobelli, editor-in-chief George Gendron, and the Inc. staff. n